Rod Bourgeois

Rod Bourgeois inquired about how AI and automated code modernization tools are influencing the roadmap and demand for Unisys's ClearPath Forward platform, specifically addressing concerns about COBOL refactoring affecting mainframe businesses. He also asked about the outlook for bookings in 2026, including the mix shift towards existing client scope expansion versus new logos.

Answer

CEO Mike Thomson explained that code refactoring is not new and only addresses a part of the story, not the engineering challenge of running mission-critical workloads securely. He believes AI will drive more demand for the platform by enabling data access and automation above the enterprise level, positioning ClearPath Forward 2050 as a positive enhancement. Regarding bookings, Mike Thomson noted that 2025 had significant renewal activity, freeing up bandwidth for new logo expansion and new scope opportunities within the existing client base in 2026, leveraging a $31 billion TAM for new scope.

Rod Bourgeois inquired about the influence of AI and automated code modernization tools on the ClearPath Forward roadmap and demand, particularly in light of COBOL refactoring concerns affecting mainframe businesses. He also asked for the outlook on 2026 bookings activity and mix, focusing on existing client scope expansion versus new logos.

Answer

CEO and President Mike Thomson explained that code modernization is only part of the story, not changing the engineering challenge of running mission-critical workloads securely. He views AI as enhancing the platform by enabling automation above the enterprise level, driving more data consumption and value. For bookings, Thomson noted a stronger backlog for 2026, with increased focus on new logo expansion and new scope opportunities within the existing client base, leveraging a $31 billion TAM for new scope.

Rod Bourgeois of DeepDive Equity Research asked for a breakdown of the changes to the 2025 revenue guidance and for an update on the Digital Workplace Solutions (DWS) segment, including volume trends and progress in high-performance compute.

Answer

CEO Mike Thomson explained the tempered revenue guidance was due to macroeconomic uncertainty affecting client decisions, slightly slower backlog conversion, and a conservative approach to revenue recognition on new deals. For DWS, he noted that PC service volumes have stabilized while higher-margin services like high-end storage are ramping up. He also highlighted the continued outperformance of the Enterprise Computing Solutions (ECS) business, driven by strong consumption and modernization of the ClearPath Forward platform.

Rod Bourgeois asked for more detail on the increased License and Support (L&S) revenue outlook, questioning if it was driven by improved volumes or earlier renewals. He also inquired about the sequential growth assumptions for both L&S and non-L&S businesses needed to meet 2025 guidance, and whether Unisys can capitalize on AI-related data center build-outs.

Answer

CEO and President Mike Thomson confirmed that the L&S upside is driven by both increased data consumption from clients and a trend of clients extending contract terms for longer durations. He expressed confidence in the sequential quarterly growth for the non-L&S business, citing visibility from backlog and new deals ramping up. Thomson also affirmed that Unisys is strategically positioned to benefit from AI data center work, noting they are actively hiring and training teams for revenue expected from OEM contracts signed in late 2024.

Rod Bourgeois from DeepDive Equity Research asked about the drivers behind the expected 2025 revenue growth rebound in the Ex-L&S business and sought clarity on the levers for improving pre-pension free cash flow, specifically the balance of cost-cutting versus pricing and mix shift in gross margin expansion.

Answer

Michael Thomson, President and COO, attributed the Ex-L&S growth confidence to three factors: the ramp-up of strong new business signed in 2024, an anticipated PC refresh cycle boosting field services, and a shift to higher-margin storage work. For gross margin improvement, he estimated a 1.5 point aggregate increase in Ex-L&S, with about one-third from top-line pull-through and two-thirds from workforce and delivery efficiencies. CFO Deb McCann added that continued SG&A reductions would also contribute to operating profit improvement.

Rod Bourgeois asked about the drivers behind the increased License and Support (L&S) revenue outlook and the reasons for weakening discretionary volumes in the Digital Workplace Solutions (DWS) business.

Answer

Chair and CEO Peter Altabef and President and COO Mike Thomson explained that the improved L&S outlook is driven by strong pricing power, increased client consumption, and longer contract extensions, rather than pulling revenue forward. Regarding DWS, they noted that while short-term discretionary project work has been weaker, the segment has seen strong signings for longer-term contracts. This shift impacts in-year revenue but builds a strong backlog that supports future growth.

Rod Bourgeois with Deep Dive Equity Research asked about the impact of new Claude plugins geared towards workflow automation on Cognizant's market opportunity and whether the company has existing partnerships in this area, building on the discussion of AI in ERP implementation.

Answer

CEO Ravi Kumar explained that the more AI can do, the greater the opportunity for Cognizant, citing examples like agentifying paralegal work, which represents a net new spend area. He emphasized that AI acts as a catalyst to amplify productivity across enterprise functions, creating new addressable spend. He reiterated that while AI technology is smart, the challenge lies in bridging the "AI velocity gap" to drift value to businesses through context engineering, process reinvention, and integrating AI with existing SaaS and operational layers. He highlighted Cognizant's role as an "AI builder" to facilitate this value realization.

Rod Bourgeois asked about the extent to which new Claude plugins geared towards workflow automation might impact Cognizant's market opportunity and whether Cognizant has existing partnerships in this specific area.

Answer

Ravi Kumar, CEO, confirmed a partnership with Anthropic and stated that increased AI capabilities translate to greater opportunities for Cognizant. He provided an example of agentifying paralegal work, which represents a net new spend area. He emphasized that AI acts as a catalyst to amplify productivity across various company functions, creating new addressable spend. Ravi Kumar highlighted Cognizant's role as the 'AI builder' to bridge the gap between AI technology and business value realization through context engineering, process reinvention, and integration of AI into SaaS layers and operational layers, especially given the significant infrastructure spending and the urgency to realize value.

Rod Bourgeois asked about the improved spending in the financial services vertical, specifically whether clients are moving beyond AI for cost savings into more AI-based reinvention. He followed up by asking about the outlook for the healthcare vertical, particularly with the TriZetto asset and AI work, and if BPO represents an increased opportunity.

Answer

CEO Ravi Singisetti confirmed that financial services has been a top-performing industry group, with spending transitioning from cost takeout to innovation. He noted a significant portion of the 3,500 AI-led innovation projects are moving from experimentation to enterprise-grade AI, with platforms being implemented in financial services and increased spending in insurance. For healthcare, he highlighted the opportunity to transition administrative costs to predictive care, leveraging TriZetto's platform with over 200 million members, emphasizing BPaaS as a 'hottest offering' driving the BPO business's 10+% growth, and noting Cognizant's leading position in U.S. healthcare.

Rod Bourgeois asked about the improved spending in the financial services vertical, specifically whether clients are moving beyond AI for cost savings into more AI-based reinvention. He followed up by asking about the outlook for the healthcare vertical, particularly with the TriZetto asset and AI work, and if BPO represents an increased opportunity.

Answer

CEO Ravi Singisetti confirmed that financial services has been a top-performing industry group, with spending transitioning from cost takeout to innovation. He noted a significant portion of the 3,500 AI-led innovation projects are moving from experimentation to enterprise-grade AI, with platforms being implemented in financial services and increased spending in insurance. For healthcare, he highlighted the opportunity to transition administrative costs to predictive care, leveraging TriZetto's platform with over 200 million members, emphasizing BPaaS as a 'hottest offering' driving the BPO business's 10+% growth, and noting Cognizant's leading position in U.S. healthcare.

Rod Bourgeois asked DXC Technology to identify its main AI solutions currently driving client revenue and to provide an estimate of the overall AI revenue mix at this point.

Answer

President and CEO Raul Fernandez explained that AI revenue is infused across various applications, such as ServiceNow AI infrastructure for insurance customers, and specific offerings like CoreIgnite (CES) and OASIS (GIS). He noted the difficulty in quantifying an exact AI revenue mix due to its pervasive use across the development lifecycle but stated that specific Fast-Track offerings will have their metrics monitored and reported at the June Investor Day.

Rod Bourgeois asked about DXC Technology's main AI solutions currently driving client revenue and for an indication of the overall AI revenue mix.

Answer

President and CEO Raul Fernandez explained that AI revenue is infused across various offerings, citing insurance applications built on ServiceNow AI infrastructure and Core Ignite in CES as a lightweight layer. He also mentioned OASIS, an orchestration and visibility platform in GIS, which is entering a pilot phase. Fernandez noted that AI is used throughout the development lifecycle, making it difficult to isolate a specific "AI bill." He clarified that specific Fast-Track offerings, which are branded and will be detailed at the June Investor Day, will be tied to the 10% revenue target.

Rod Bourgeois of DeepDive Equity Research asked why typical seasonal margin improvement was not reflected in the guidance and requested an outline of the key factors that will drive DXC to achieve profitable revenue growth.

Answer

CFO Rob Del Bene acknowledged less seasonality from Q1 to Q2 this year but affirmed the guidance still implies margin improvement in the second half. President & CEO Raul Fernandez identified three key growth drivers: winning renewals, competing effectively on RFPs, and scaling new 'proactive solutions' that leverage AI and DXC's industry heritage.

Rod Bourgeois asked about the company's investment priorities for new solution capabilities, the magnitude of these investments, and the specific market segments or deal types DXC intends to 'major in' to drive growth.

Answer

CEO Raul Fernandez said the investment focus is on creating repeatable, scalable capabilities based on proven client work, particularly in financial services, where DXC has significant traction and replicable ROI models. CFO Rob Del Bene added that sales and marketing is another key investment area, and the magnitude of the investment is reflected in the company's fiscal 2026 margin guidance.

Rod Bourgeois asked if DXC is entering a new phase of its turnaround and questioned the Q4 sequential revenue decline guidance, suggesting it might be conservative given historical positive seasonality.

Answer

CEO Raul Fernandez described the current phase as sustaining positive behavior changes and improving consistency, emphasizing that it's still early in the process. CFO Rob Del Bene stated the Q4 guidance was 'right down the middle' and not conservative, with the decline driven overwhelmingly by the revenue impact of weak bookings from the first half of the year, not abnormal runoffs.

Rod Bourgeois posed two structural questions about the ITO business: first, how much further the intentional reduction of low-margin resale business would continue, and second, whether the AI era is accelerating the migration of legacy data centers to the cloud.

Answer

CFO Rob Del Bene projected that the decline in resale revenue will continue for another 6-9 months before stabilizing in the second half of the next fiscal year, confirming it's an intentional strategy of holding firm on margin thresholds. CEO Raul Fernandez stated that generative AI is creating new opportunities for holistic services, including data cleansing and rapid prototyping, which can significantly grow client relationships, as evidenced by a recent 10x fee increase with one client.